2010 (8) TMI 936 - HC - Central Excise

Refund claim - prices are fixed on the basis of the tender and series of negotiations which normally take some months - the assessee cleared the goods for the period from 1-4-1999 to 31-3-2000 at a price which was higher than the price which had been fixed - Held that - reliance placed in the case of COMMISSIONER OF C. EX., NAGPUR Versus ORIENTAL EXPOLSIVES (P) LTD. 2007 (8) TMI 206 - HIGH COURT, BOMBAY , where it was held that when the assessee has not passed on the duty to the customer and if it is not a case of unjust enrichment and the customer who paid excessive duty, subsequently has raised bills seeking adjustment which has been granted and when this fact has already been brought to the notice of the Department even before payment of the excise duty, even before the contract is concluded tenders are accepted and the rates are fixed, the assessee is entitled to the refund - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Refund of excise duty paid by the assessee.
2. Application of the principle of unjust enrichment.
3. Interpretation of the facts in light of relevant case laws.

Analysis:
1. The case involved a dispute regarding the refund of excise duty paid by the assessee, a manufacturer of explosives, for the period from 1-4-1999 to 31-3-2000. The assessee had cleared the goods at a price higher than the one fixed, leading to a refund claim of Rs. 70,469 for the excess duty paid. The Assistant Commissioner and the Commissioner (Appeals) rejected the refund claim citing the principle of unjust enrichment based on the MRF Ltd. v. CCE, Madras case. However, the Appellate Tribunal set aside the orders, noting that the circumstances in the present case were different as the assessee had informed the Department before payment of excise duty about the possibility of adjustment in case of a duty reduction, entitling them to a refund.

2. The issue of unjust enrichment was central to the dispute, with the revenue relying on the MRF case to deny the refund claim. The Tribunal distinguished the facts of the present case from the MRF case, emphasizing that there was no unjust enrichment as the assessee had not passed on the duty to the customer and had informed the Department beforehand about the potential refund. The Tribunal's decision was supported by a similar case between the assessee and the Department involving Coal India Ltd., where the Nagpur Bench of the Mumbai High Court had ordered a refund of excise duty paid by the assessee.

3. The High Court, in its judgment, referenced the decision of the Mumbai High Court, Nagpur Bench, in the case of Commissioner of Central Excise, Nagpur v. Oriental Explosives (P) Ltd. The High Court found the facts of the present case to be identical to the Oriental Explosives case, where the court had ruled in favor of the assessee, allowing the refund claim. The High Court concluded that since the assessee had not passed on the duty, had informed the Department in advance, and the customer had sought adjustment for the excess duty paid, there was no unjust enrichment. Therefore, the High Court dismissed the revenue's appeal, answering the substantial questions of law against the revenue and in favor of the assessee.